Bracing for loss of Andersen jobs

The impending layoff of Andersen staffers will reverberate through the local economy, hurting the restaurants, hotels and airlines that serve the business as well as the department stores, theaters and car dealerships that cater to Andersen employees.

The Chicago economy could lose as much as $700 million in economic activity if Andersen cuts half of its local staff of 5,300, according to an analysis by the Regional Economics Applications Laboratory (REAL) at the University of Illinois at Urbana-Champaign.

The first wave of layoffs is expected this week, with estimates ranging from 10% to 15% of some departments to as much as 70% of staff at the Chicago-based firm's St. Charles training facility.

The REAL estimate reflects the loss of income for the employees if they remain unemployed for a year or move elsewhere, the value of their services and the ripple effect on other businesses. REAL estimates the region will lose 1.14 jobs for each layoff at Andersen.

Even under a more optimistic scenario, which assumes that only one-third of Andersen's local employees remain out of work for a year, the hit to the region is substantial: $466 million.

"The biggest impact is going to be at the community level," says REAL Director Geoffrey J. D. Hewings. "These people aren't going to be spending money on clothing or restaurants or coffee."

Complete coverage of this story appears in the April 8 issue of Crain's.